When it comes to Motor Trade Insurance we’re often asked what level of cover, or indemnity as it’s referred to, do I need? Well that depends on what you do in the trade. A mechanic, for instance, may need a totally different level of cover from a valeter. We’re going to try and help you decide.
First off, if you’ve only got a cheap run around yourself it may be better to split your indemnity. i.e A car jockey (with a £3.5k Mondeo) could have £5k of cover on his own vehicles and £25k for customers. This works out a lot cheaper than just having £25k of cover for both his own and customer’s vehicles.
Then it may depend, lets say if you’re a salesman, on what type of cars you specialise in. Do you need £20k worth of cover if you generally sell 10yr old Fiestas? Probably not, and remember if you start out with a low indemnity you can always increase it later on in the year if you need to.
On the other hand, a Ferrari valeter would probably want a very high level of indemnity. You may find that some customers require proof of suitable comprehensive cover before they allow you to take their pride and joy. Specialist policies can extend road risks cover to £100k and over in certain circumstances. These policies, though, can be a little bit more expensive than the average because of their nature.
Some may just need Third Party Only. A motor trader who specialises in breaking cars and salvage vehicles might not need anything more extensive. Their only real risk would be for the vehicle they were driving as the vehicles they collect or dismantle might not be worth much and would be on the back of their truck – also for this type of motor trade business a lot of trade insurers will only give Third Party Only.
Purchasing a level of indemnity is a calculated risk on your behalf. Unlike a private car policy the responsibility for how much cover you want rests on your shoulders. An example – you’re a mechanic and you drive people’s cars. One day you crash a customer’s vehicle (your fault) and do £8k worth of damage, but you’ve only got £5k of cover. The insurance will only pay out a maximum of £5k so what about the rest? Who pays the £3k leftover? That’s right, you!
Remember, a good broker can help and advise you on what levels of Motor Trade Insurance you need. They should be able to find you a policy that fits your needs, rather than make you fit the policy. If in doubt always seek professional advice.
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